US-China trade deal in doubt, Trump says US ‘not ready’

President Donald Trump cast more doubt on chances for a trade deal with Beijing on Friday, signaling he might cancel talks set for September amid an intensifying US-China trade war.

“We’ll see whether or not we keep our meeting in September,” Trump told reporters at the White House before heading out for fundraisers in New York and then vacation at his New Jersey golf resort.

Relations have soured further in the past week after Trump announced a new round of punitive tariffs on Chinese goods, despite a truce agreed with President Xi Jinping in May, and Beijing responded by halting all purchases of US agricultural goods.

The US Treasury then declared China a currency manipulator, after the yuan lost value in the face of the new round of tariffs due to take effect September 1.

“We’re not ready to make a deal but we’ll see what happens,” Trump said. “We have all the cards. We’re doing well.”

US and Chinese negotiators met in Shanghai in late July for the first time since talks collapsed in May, and were due to hold another round in September.

“Whether or not they’re canceled, we’ll see,” Trump said.

He also said the US will not do business with Chinese tech titan Huawei, despite earlier pledges to allow American firms to file for waivers from national security restrictions on the company’s operations.

His comments sent US stocks sharply lower, losing as much as 250 points, undercutting a recent recovery from the continued concerns the trade war will cause a slowdown in the global economy. Shares recovered somewhat but still closed in the red.

– Weaker dollar –The countries have imposed tariffs on $360 billion in two-way trade, and with the new round announced by Trump all Chinese goods would be subject to punishing duties.

Beijing on Monday allowed the yuan to sink below seven to the dollar — a key psychological threshold — but then intervened to halt the decline.

Trump again accused the country of “depressing their currency,” but his comments on the trade talks sent the exchange rate even lower.

“The Chinese yuan, which has been in the spotlight all week is edging closer to its recent decade-long low,” Gorilla Trades strategist Ken Berman said in a note.

But an IMF official said Friday that allowing the currency to adjust freely to economic factors is one of its recommendations to Beijing.

James Daniel, the IMF’s mission chief to China, said the situation “requires some kind of response.”

In a series of tweets on Thursday, Trump lamented the strength of the US dollar which puts American manufacturers at a disadvantage, and once again demanded the Federal Reserve lower interest rates to counteract that.

He pressed his relentless campaign against the US central bank on Friday, but backed away from calls for a weaker exchange rate for the dollar.

“No I wouldn’t do that,” Trump said when asked if he wanted to devalue the dollar.

However, “If the Federal Reserve would bring down interest rates over a period of time, I would love to see a point or a little more than that.”

The Fed raised the benchmark US interest rate four times last year, a total of a full percentage point, but pulled back with a rate cut last week.

Lowering the benchmark lending rate tends to reduce demand for the dollar, thereby weakening its value, but the US economy remains stronger than those of many of its trading partners and investors flock to the dollar when there is economic uncertainty.